The article on the page below was published a good while back in the absence of an ebook on the subject. I had published an ebook on trading horses ‘in running’ which many people have done very nicely from and continue to do so. But I couldn’t face the prospect of trying to document everything I knew about pre-race trading, it just seemed an impossibly massive task, so I avoided it for a long time.
Since publishing this page, the information below attracted so much interest and helped so many people (who kindly told me so), that I was repeatedly asked (and foolishly promised!) to produce an ebook specifically about trading the horses before the off. Ok, I missed the deadline by well over a year as I greatly under-estimated how much time and work it would take to write something practical but big on detail (as was requested), but I finally got it produced in January 2019. So if the article below is up your street, you might want to look into my newest and by far the biggest (and best!) ebook: “The Pre-Race Trader’s Bible“. It was an inredibly big undertaking, and one which has received countless positive reviews from readers as found on the testimonials page.
Pre-Race Trading on Betfair
For good reason, trading the pre-race markets (successfully) is seen by many to be the Holy Grail of the entire Betfair trading world. Therefore as you might well expect, it can be an extremely elusive goal to say the very least, and not just for novice traders either.
Many readers have asked me to explain how I trade the pre-off markets so I decided to put together a lengthy article to give an outline of my approach, in particular the strategies I use and when and how I apply them. There is no way any ‘article’ could take you from novice to pro trader, that much should be blatantly obvious to you before you begin. But I will do my best to make this as useful as I can within the limitations.
Trading before the off is generally considered safer for the beginner than doing so In-Play or ‘In-Running’ to give it its proper name. It allows time for the novice racing trader to assess things fully and avoid getting led (misled) by lightning-fast and often unpredictable sudden market movements which can be pretty scary to just witness during a race, let alone to trade. That’s not to say it can’t happen before the race though!
For the average beginner to Betfair, there is too much going on after the off which can easily cause a “fat finger” moment or a mis-click leading to heavy losses if not extremely careful. Therefore most people who try their hand with horse racing for the first time tend to stick to the pre-race markets until fully up to speed with the factors which cause prices to move, as well as general experience of the racing business and knowledge of horses, trainers, jockeys, course layouts, etcetera.
(Trading “In-Running” is a very different beast to the pre-race style but, depending on the methods in use, it doesn’t need to be quite so scary. I recently published my IR strategies in my In-Running ebook, these are fairly beginner-friendly but profitable methods which many readers have been impressed with.)
It is important to note here that all horse racing trading, whether before or during the race, can be quite difficult to master. It would be pretty dishonest for anyone to suggest otherwise in my view. Anyone I have ever known who has mastered it knows only too well that it didn’t all click into place overnight, far from it. Having said that, I should also point out that once you have mastered it, you will be hard pushed to find a faster way to make decent regular profits in normal working hours from the comfort of your home.
Horse racing markets are, at least when compared to stock markets, volatile to say the least. Things happen very quickly, sometimes for reasons we can’t understand (no matter how experienced we are). For example, how could I possibly know that a huge gambling syndicate is about to stick half a million quid on the second favourite in the 3.40 at Newcastle 60 seconds before the off?!! It is not necessary to have a crystal ball to protect yourself from such things, but plenty of experience combined with a HUGE level of personal discipline and a very defensive mindset in your trading is more than enough to prevent such things emptying your bank of all the green you made in the previous few races.
I have mentioned how difficult it is to trade horses. There is however one thing which is even more difficult than taking regular profits from the racing markets. That is teaching other people to do it! I can’t back this statement up with any data as that would be impossible, but nevertheless I would have a very big bet on my belief that if you could round up all the people who have been on any of the many Betfair pre-race trading courses, you would be lucky to find more than 1 in 100 attendees who end up trading these markets full time for a living. I would not be at all surprised if it was less than 1 in 500.
Is this because the courses or trainers are all rubbish? I don’t think so, and from what I have heard from people who have attended some of these courses, the opposite is more likely the case. It is just that this stuff is bluddy hard to master! Also, I know myself just from running this trading blog, many (perhaps most) attendees and people expressing an interest in learning to trade on Betfair are looking to “get rich quick”. I get quite a few emails from people asking how to trade football “without having to do all the analysis” or asking questions which clearly give away their motivations, such as “whats the best gambling tipster”?! (This site is about trading, and last time I checked, that ain’t gambling!)
These types of questions tend to come from people who are basically saying “I want all the good stuff, without the effort, please hand it to me now.” The laws of nature dictate that anything worthwhile takes effort, the more worthwhile it is, the more effort it requires (among many other things). Since Betfair pre-race trading is the holy grail, it stands to reason that this form of trading takes more time, effort, discipline, experience, knowledge and patience than any other method. I believe this to be the case too, without a shadow of a doubt.
Due to this difficulty factor and the complexity of these markets, I can not explain my entire approach on this page. I wouldn’t do that even if it was possible, which it is definitely not. There is theory, and then there is practice. And then there are months of repeating the practice, re-reading the theory, and so on until it just “clicks”. Oh and Spoiler Alert: It doesn’t ‘click’ for everyone even after a huge amount of practice.
Trying to learn racing trading is like trying to read a very big book by a very dim candle light. When that “click” happens, it’s as if someone just turned on a 500W halogen bulb and added colour pictures to the pages of your book. It’s literally that sudden and that significant a change. It’s completely unmissable when it happens. Anyone out there reading this who has mastered horse racing trading will know precisely what I am talking about. There is an unmistakable “aha” moment, for those who stay the course anyway.
Until then, it feels very much like guesswork. Suddenly, one day, IF you put in the hours, the buckets of self-discipline, and follow a long list of imperative do’s and don’ts, the blurry experience of watching ladders going up and down without rhyme or reason just clicks into place and becomes clear at long last. You are then able to glance at a market and within a few seconds decide whether:
- There is no trade here
- There is an obvious trade here
- There may be a trade here soon, IF x,y and z happens.
Point 1 is, in my experience at least, by far the hardest to learn to identify. It may sound silly but again, for anyone reading this who knows how to trade pre-race markets, it will make a lot of sense I am sure. The reason is because of that age-old arch enemy of every trader, especially learners… GREEEEED.
It can take many months for some people to stop looking for a trade, and instead look at the markets in a more calm and balanced way, just aiming to find out what IS happening rather than what they want or hope to see happen. It takes a long time to kill off that unscratchable itch to “find” a trade. In general, beginners look for trades. Experienced traders just look at the market to see if there is a trade. And the answer most of the time is NO.
This is where novices try and ‘force a trade’ out of an unwilling market, and I don’t care who you are or how big your Betfair balance is, NOBODY is big enough to push the markets around. Doing so only ever ends in tears, and substantial losses of course. Sitting tight, resisting urges to click when your gut feeling says “dive in” is in my view the biggest key difference between experienced traders and novices, that goes for any market on earth, but especially the Betfair racing markets where the speed and size of the trends can be an irresistible temptation for even the most disciplined character.
As most traders know, the majority of markets do not have a trade available for you every time you glance at the screen, surprise surprise! Easy to understand that logic in the cold light of day isn’t it?! But knowing this in theory, and behaving accordingly when you’re faced with a busy screen of clickable ladders, these are two very different things. This is assuming you are looking for a sign that a move is about to take place which is the main focus of my approach to pre-race trading. Of course some people are just looking to scalp one or two ticks, and for those people yes there could easily be many trades in every market, every day. I do that myself when nothing else is on offer, but generally I am looking to trade bigger moves whenever possible.
Spotting a move in the markets (ideally before it happens!!) takes considerable practice and experience as well as some tools which I would say are essential if you are remotely serious about mastering horse racing trading. Betfair Trading software is an absolute must. Live TV pictures are essential too.
You can use Betfair’s live video (https://livevideo.betfair.com/) which is definitely good enough to trade with, but if you can afford it most people (including me) subscribe to a racing service such as RacingUK. It’s just a deluxe option compared to the Betfair feed. Firstly you have commentary in between the races which can give you tips and insights you won’t get with the Betfair feed. Secondly you have it on your main TV screen which is bigger, far better quality, and frees up your PC screen for more ladders or charts or Sonic The Hedgehog or whatever else you want on there. You can also watch AtTheRaces on channel 415 on Sky, which is free so that’s a good idea to use alongside Betfair’s live feeds, so long as you remember it is very slow, often 6-8 seconds behind the action.
Due to the delays on all the feeds, especially ATR, I would never advise trading just based on what is being shown on the pictures. The stuff to focus on is what’s going on on the ladders and charts. The pictures merely give you hints and tips for why the ladders are doing what they are doing. They are a safety net, or an EXTRA indicator, not a trading indicator on their own. If you don’t understand why, consider the fact that what you are seeing on the TV screen is being seen LIVE (with no delay) by a lot of traders at the track. Why would you want to put yourself up against those highly experienced traders, and hand them a 6-8 second (or longer) advantage over you? Are you just keen to throw money away?!! Good, neither am I. Watch how fast those on track traders snatch your cash if you leave it hanging out in the breeze! Your trading software will show you what is going on at exactly the same time as everyone else, you have no delay and no disadvantages, that surely must be a good starting point for anyone, beginner trader or full timer.
There’s a variety of trading methods in my toolkit and I use them all from time to time, but the main bulk of my trading is done using just two approaches:
- Early trends or moves – all day until 30 minutes before the off (possible to do without software)
- 10 mins pre-race until the off (trading software essential)
Early Trend Trading
The basic approach of my early trends strategy is to find what looks like a strongly fancied horse, usually within the top 3 or 4 horses in any race based on the early morning tips in the Racing Post, Sporting Life and other leading newspapers and websites, combined with chart analysis and other data. This is long before the markets start getting any serious liquidity. It is very rare that I look to trade in markets with “thin” volume but this is an exception. The thin volume can actually help here. If the markets are only just getting going, the lack of volume can often mean that the market hasn’t fully “formed” yet, in other words the runners haven’t been backed or laid heavily enough to price them at anything like their true ability or likelihood of winning.
All trading is about trying to find a reliable way of predicting moves. In this case, what the tipsters are saying and what the betting markets are doing give a combined indication which is often very reliable, leading me to take a position based on where I think the volume will go when it arrives throughout the day. Go in any bookies at 9-10 am and see how empty it is. Spend the day in there (as I’ve done many a time in a past life of dirty gambling!) and you will see that nobody really goes to these places early in the day except the die-hard down and outs, and occasionally a few pros who want those early prices for the same reasons I do!
When the punters start cramming through the door around lunch time, stuff starts to happen. When the Betfair traders get on their ladders, stuff happens even faster. When the serious traders (bookies even) get involved, the markets can look very different to how they looked at 1015am. This change is what this method is all about, trying to identify where the money goes when it finally turns up.
I will look at all the tipsters and all the betting money. Where the early betting money is going can give an indication of a horse which is going to be strongly fancied, but without something to corroborate that idea, it’s not tradeable as an idea in itself. This is where the tipsters come in. Likewise the other way around, seeing the tipsters all napping the same horse is not enough to start backing it in, but once we see betting money following the tipster’s selections, that again corroborates the idea and we now have evidence that the tipsters are influencing the punters, which gives us a good idea where the growing volume is likely to be heading.
In this case, if many of the tipsters fancy a particular horse, and the early betting shows a large volume of bets going in the same direction, I would then place a back bet on the horse as early as possible. I will watch the odds throughout the day monitoring my position fairly loosely (with practice this gets easier, they rarely go badly against me but they can sometimes, so I check every half an hour to an hour generally).
When the market warms up with heavier volume I will look more regularly hoping for a stronger pre-race trend to form as it gets backed in closer to the off. This doesn’t always happen, some horses come in based on the newspaper tipsters but then the trader’s undo that idea and turn it back around, hence the reason for more regular checks later on. Tipsters are a punter’s tool, not a trader’s tool, so they have more value in the morning than later on, and they are frankly worthless once the race gets very close to the off, around 30 minutes before the race. If the horse doesn’t keep coming in, or if it looks like turning around and drifting back out I will close out my trade. Usually it will come in at least 5-10 ticks, sometimes less sometimes more and of course sometimes they are losers. I will take a profit when I feel it has run its course as far as the trend is concerned. If it goes against me, I won’t let it go too far as clearly my early idea was wrong, so why keep throwing money at it?
The only other thing worth mentioning is the use of charts in my trading software. By using these charts you can get a better idea of the trend’s strength, and when it looks like slowing down or reversing which is obviously a good time to exit. I check regularly to get a fresh look, if anything looks like changing drastically, I am out. If nothing has changed, I will hold on as long as possible as it inches in my favour.
Recently I have been working with a friend of mine (programmer) to try and develop a small piece of software to do most of the donkey work above. The idea is to design something which can do all of the selections for me in seconds, and possibly even manage the trades too if we can get really clever with it. But for now maybe just an alert to text or email me if the price moves suddenly against my position. It’s coming along well but nowhere near finished yet. If it works how I hope it will, it could be a nifty piece of kit, and I will update the site as and when, so stay tuned by liking the Facebook page or subscribing to the email updates using the form in the sidebar as I will announce this when the testing is finished and I am confident in it’s selection ability.
2. 10 Minutes Pre-Race Trading
The second method is the one I use much more frequently. The early trends require my day to be fully free from early doors right through until the races start as I may need to sit down and check charts and information online etcetera throughout the day. I don’t have an awful lot of days which are that clear lately, or I may have plans to go out before the racing begins so on those days I will not trade the early markets.
My main pre-race trading is done in the last ten minutes before the off. Of that ten minutes, the first 2-5 minutes is usually spent analysing and/or waiting for significant volume to get going. For true trend trading, the more money involved, the more reliable the signals become. This applies to any market. Thin markets are known for wild volatility and unpredictability. It therefore stands to reason that the bigger the market (in terms of volume) the greater the stability, and the more weight we can put on the signals we are looking at.
Early in the morning, one big bet can move a horse quite a long way in or out, it can even start a ‘false trend’ running as some people (stupidly) ‘follow’ the money. During early trends analysis, any races with a big sudden chunk of money would be ignored generally, as that can be enough to imbalance the market and cause a higher risk of a losing trade, due to the trend not being “real”, for want of a better word. When it comes to trading just before the off, big money is coming in every second or two. This means the indications given by the flow of that money are more reliable.
I have said already and I will say it again, this type of trading requires a HUGE amount of practice and discipline. Therefore I won’t even begin to pretend that reading this page is going to make anyone a successful pre-race trader and I would ask all readers NOT to read this page then go off and trade based on the few details I give here. With that said, here is a basic outline of how I trade the 10 min pre-race markets:
A) Strongly Trending Market
These are easy to spot once you have watched enough ladders. We are looking for a horse on a constant and steady (sometimes fast) move in one direction. I open all charts for the main players in a race. When I say “main players” this is not an exact science but I am generally referring to all horses which look like they have half a chance based on their odds. In some races, the favourite might be odds-on, the second favourite is 3.0, the third favourite 6.0 and the rest over 20.0. In this case, I would say there a three “main players”. However a competitive handicap at a big meeting might have 5 or 10 horses all which are priced under 14.0 and with no clear favourite, in which case there are a lot of charts to look at. For this reason, I may not even bother with this race, that’s the old “time for a cuppa” method, you can have that one for free!
With practice and experience of watching the markets, it’s soon quite easy to see at a glance whether the race has a wide field of fancied horses or, in many cases, a strong top one or two horses plus a few others in contention, the rest are all outsiders and I virtually ignore them. “Virtually”, not “completely”, as if a horse is backed in from 24.0 to 12.0, this could have a big impact on the other horses, even the favourite. But this is very rare so I tend to only look at the outsiders’ charts if the main players are acting “weird” or if I can’t fathom why the favourite is drifting when it looks like it should be coming in or at least staying where it is.
So, assuming I open the charts and I see a favourite which has crept in (coming down in odds) all day, and is still gradually coming in 10 minutes from the off, I will look for the reasons. This is usually (ideally) caused by one thing, the other horses are not competing with it in the betting market so their prices are not pushing the book in any direction. If I check and see all horses other than the favourite are looking weak (in betting terms) or drifting out in price, I will back the favourite and keep an eye on those other horses for a sudden change where they might start gaining in strength which would threaten my plan to back the favourite as it comes in before the off. Most strong favourites, without any real pressure from other horses in the market, will come down in price the closer you get to the off time. Everyone loves to back a strong favourite, that is not only true in the bookies but on the ladders too.
I use a dedicated computer for all of my horse racing trading. I don’t often take screenshots as doing a shift-printscreen then a copy paste into a paint document and filesave seems a horrible prospect when I am focussed on the markets! I will see if I can sort out a better way of doing it at some point, although I have no plans to run courses on this stuff so not sure if there is much point really. I have a few friends who trade on Apple computers and they can take lightning fast screenshots, so I get a few sent over for my comments now and then. Here is a good example of a fairly simple trade (Thanks AJ):
Important: If I can not see a reason, or anything which helps me understand why the favourite is doing what it’s doing, I will NOT trade that market. Saying this and doing it are two different things, and even these days I might still trip up now and then by entering a market I perhaps wasn’t too clear about beforehand. Just being honest, I don’t like to admit this really! I am yet to meet a “perfect” trader, and I sure as hell ain’t one!
If I do get into a market without enough clarity, I am out the very second I realise my mistake. This is another very hard thing to do in practice, but very important to learn. Trading isn’t personal. The market didn’t fool me. I fooled myself, I disadvantaged myself, so I must restore my advantage by getting out and saving my cash for a race I do have a better feel for. The markets are never right or wrong. They just…. are. 🙂
This approach applies to a drifting favourite just the same but obviously in reverse. If I see a favourite trending out, I will again look at the other runners to see if I can find the reason. A steaming or drifting favourite is never enough reason to trade. I don’t trade “moves”. I trade the reasons for a move. A move which you can understand is the only tradeable move. Otherwise how would you know when the move is coming to an end? And they always do of course. Picking a good exit price is half the battle of making regular greens. Staying in until it reaches its “top” is suicide, which is obvious when you think about it as the top is only evident once it has come down from it!
You need to let the market keep some of the money, take a nice chunk out of the middle of the trend, and leave the tops/bottoms to those who really do have a crystal ball (which means those who don’t last very long). If you are just “chasing” a drifting horse which is drifting for reasons you have no idea of, you are basically the mouse running up the clock. You are aimless, purposeless, confused, and ultimately nervous of that rebound you ‘just know is coming’ but you haven’t a clue when! You will then get “shaken out” when the market does have a small retracement or re-consolidation, out you get, while the drift may well continue much further. You can’t possibly know whether it’s just consolidating (pausing) or actually has finished the move and could whipsaw back on you, unless you know why the move happened to begin with.
If you can only understand one move a day, you should only trade one race a day. It’s as simple as that. Don’t over-trade, over-learn instead. It’s cheaper to do, and sets you up for a much brighter future.
The markets are basically a see-saw with the favourite on one side and ALL OTHERS on the other.
It may not always be that clear cut, but that’s the best way to think about it in my experience. So if one side is pushing down, the other side naturally must rise up as the book tries to stay in balance. Getting this “feel” is where the real aha moment lives. More importantly, getting a feel for how strong that see-saw movement is, that’s when you are really motoring. Some markets given a casual glance can look like there is a lot of downwards pressure on the non-favourite side, but on closer inspection it might have been misleading as the prices may just be at resistance points (strongly traded prices with very little volume below/above depending on which way it’s going). In which case you would bear in mind your initial feeling, but you would need it to be confirmed by those horses sitting on resistance actually breaking through that resistance. Then the see-saw would have some real power behind it, and a trade is then sensible as the odds are heavily in your favour that the favourite will move and will move enough distance to get you in, out, and greened before it runs out of steam.
As you may have realised, I tend to only trade the favourite. This is not a concrete rule by any means, I do trade other runners but I trade the favourite far more often. It’s where the bulk of the money has gone during the day usually so it at least feels like the safest place to stick my cash. Obviously in some races there is no clear favourite and I will either walk away or have a half stakes dabble on another runner just based on my hunch of what’s going to happen. In such cases I am ready to pounce on the exit button if I am wrong, but equally ready to pounce in with my other half stake if my gut feeling was right.
B) Ranging market
A ranging market takes a second or two to spot. Years ago when I started trading the racing markets I used to hate these and I usually left them alone as I was only ever hunting for a big trend on the favourite in either direction. Over time, I learned that money can be made from the ranging markets too, not as much perhaps, but making a few quid here and there in between the bigger moves certainly seemed better than drinking too much tea and running back and forth to the loo all afternoon.
A ranging market is basically just a market where the horses are not trending strongly, and are bumping up and down inside a previously traded range of prices. You can see this previous range within your software, all the main trading software programs show the traded volume next to each price on the ladder. This gives me an instant view of where that horse has traded and more importantly which prices saw the most money being traded. A ranging horse is a horse which has a very clear band of prices at which it has traded, and very little volume outside that range. A ranging market is just a market where all horses are doing that, they all have a tight and clearly defined range where the horses just don’t seem to want to trade outside of. Here is a good example of a ranging horse:
You can find hundreds of these when you start to recognise the simple indications of a horse ranging tightly. In this case you can see the horse has actually traded well above, up to 4.0. But those small sums can be ignored as that was probably just early morning activity while this runner “found it’s correct price” in the market. This might remind you of why and how I do the early trends stuff above. There was a gentle shortening of this horse’s price throughout the day until the real money arrived to determine its “real” price range based on a much bigger weight of opinion (money). After this time the big money has quite clearly shown what prices this horse is ‘happy’ to trade at. It has traded as low as 3.15 but again you can see the volume is £86 (which means £43 backed and £43 laid), versus £9,500 traded at 3.35 and £9,700 traded at 3.45. This tells me that the real money formed a tight and clear range of (roughly) 3.6 to 3.25. Any range of more than about 10 ticks would be ignored as that’s not tight enough to be reliable. But in this example the horse has slowly been backed into this range and now it’s found that range it is likely to be fairly “obedient” to its boundaries. Again, no guarantees in trading, but the probabilities are good enough for me.
A competitive handicap (Hcap shown on Betfair) is often a good place to find these, not that I go looking for them. Handicapped races frequently have horses trading within a clear range. Sometimes only 4-5 ticks, sometimes more, sometimes even less.
Knowing that this “range” is where the horse has traded all day is valuable information. Of course past data is certainly no guarantee of future performance (heard that before?!) but it stands to reason that if a horse has only traded between 1.94 and 2.0 all day, it is reasonably likely to meet with some resistance if it tries to trade outside of that range. Why? Because it has resisted doing so many times already.
Of course it’s not the horse that’s “resistant”, but the market participants, the punters and traders in other words. Every time the horse was backed down to 1.94, the layers got off their back sides and laid it saying “that’s a good price to lay”. Then each time it drifted up to 2.0, the backers got back involved saying “that’s a good price to back” and so it continues. As these ranges can and do sometimes get broken, we must not see them as any kind of rule, just a suggestion of what is likely to happen. Trading is all about an ‘edge’. An edge means more than 50/50 chance, so that if you did the same thing over and over again, you would end up more often green than red. If it was guaranteed, it wouldn’t be a trade. It is a trade because I am aligning my money with what is more likely than not to happen. I expect it to go wrong, I plan for it to go wrong, I am ready to act the second it does go wrong. That’s the losses taken care of and prepared for. Of course more often than not, it doesn’t “go wrong” and the traded range helps to keep the price where I am hoping it stays, meanwhile I can bag a few ticks, often several times in a minute or two.
So, in case you hadn’t worked it out, I will lay a horse at the bottom of its traded range (only if its a clear and narrow range) and back it at the top. At least that’s the basics of it. I will also have several eyes peeking at the other runners, again looking for an early warning that something is not going to pan out how I want. In a ‘rangey’ market, most or all of the other horses are also in a range, the horses that could have an impact on the favourite anyway. If one horse, or worse still, two other horses break out of their previous traded range, it stands to reason that the favourite may now have an increased chance of breaking out of it’s own range. At this point, I am out, usually before it actually does so. If I don’t see an early warning and only notice when the horse I am trading breaks out of its range, I am out a tick or two (three at the very most) after it leaves its previous range. This stop loss can be automated in trading software. I don’t always use it but I do sometimes, especially if the phone goes or some other distraction turns up (which I know it shouldn’t!).
Some markets can stay within their ranges right up to the off, but I will usually expect at least one attempted breakout as they do often test their boundaries at some point before the off. With this method, the best trading period in my experience is between 10 and 5 minutes from the off, 2 minutes at the very latest. When it gets closer than 5 minutes to the off I find more chance of range breakouts, 2 minutes from the off they are even more likely. If I am already in a rangey trade as 2 mins comes along I won’t necessarily exit my trade, but I will move my stop loss closer to protect more green on an open trade to reduce my exposure to a sudden late move.
I had a look around on Youtube for a video which might show a rangey market nicely for those readers who have not looked at this stuff before. Curiously, I couldn’t find anything too clear to demonstrate it, but the last video I clicked on was a Peter Webb (of Bet Angel fame) video entitled “How to read a racing market”. Don’t view it as a way to learn how to read a market, it’s not a nice market at all as you will see! But…. It’s got some real value here. Here is a market which firstly looks tricky regardless of any significant things happening to make it even more tricky, and something did happen to do that, a horse was withdrawn. In case you don’t know already, when a horse is removed the market has a major reshuffle to account for the change in odds across all runners. These are nasty races for beginners generally, you can almost throw all the early analysis out of the window! But this video is perfect for showing here. Peter does well to get a green from this market in my view, I suspect he would agree it wasn’t a great market to be trading and great respect should be given to him for publishing it as some people wouldn’t, and I am sure he could have chosen some much more boastful or impressive examples if he wanted to. Kudos.
Watch the video and then I will explain why I think it is so useful:
When I opened this video up and saw the first glimpse of the ladders, I very nearly closed the window as it looked to be of no use whatsoever in showing the type of rangey market I am discussing here. But for some reason I was intrigued enough to watch it through and I am glad I did. Even in an erratic and volatile market which has just had a hand grenade thrown into it, look how quickly a range formed. Again, this is NOT my idea of a perfect example of a tight range but loosely I would say it quickly became apparent that this horse had a range of 1.76 to 1.81 ish (once it has formed). See 3:58 on the video to see the traded volume bars starting to ‘paint’ a nice range for your eye to see.
Watch it again, and count how many times it hit the end of the range and reversed. So even though Peter Webb was looking for a breakout/trend to start happening (which is the opposite of what I am watching it for!) this video ended up being a prime example of range trading to my eye. How many range trades could you have had in this market? Loads. I am not saying you would have been right to do so, as I don’t think this looks like a nice market to be range trading at all given the early action and the non-runner adjustment, but it demonstrates the movements so nicely I think it’s an excellent, if unlikely example to help explain my point.
00.05 (5 seconds into the vid) – The market looks like someone just threw a grenade into it, as Peter says himself. He now waits for things to settle down and get some clarity again.
00.36 – Some big backing takes place which finally starts to push to find a “bottom” for this horse’s prices.
01.21 – Big bet takes the market out of the bottom of the range for a split second, but the layers did their duty and jumped back in to keep the price above 1.76. What actually happened here is someone wanted to back a grand or whatever on this horse, and decided to back it down at 1.74 which hoovers up all the money in the queues above it first. Instantly those lay orders which were hoovered up were replaced with plenty more. So in effect this big back bet was an anomaly, it was a one off, and didn’t indicate a break out of the range. If it had been followed by just one more similar bet, that would suggest to me the range has no bottom yet or isn’t going to be a range at all.
01.24 – Look at the volume bars growing on the right of the ladder. Look at 1.75 and 1.76. Regardless of the back bet which has just gone through the market, it is clear that 1.75 didn’t have a lot traded, and nearly 5 times as much has traded at 1.76. It also didn’t spend more than a second or two at 1.75 before going back up a tick to 1.76 where it seems to “feel” much more comfortable.
02.13 – He placed a similar bet to what I would have, laying at 1.77, but I would have probably waited for 1.76 as the volume bars on the right hand side clearly show the horse is good friends with the 1.76 price. Just after he enters, it dives one tick below his lay. He (wisely) gets out as for a split second it looked like a strong move down. If he had held one more tick, he would have stayed in for the subsequent return up the range. I would point out here that in no way am I criticising the master of Betfair racing trading (which is Peter Webb by the way). He is simply looking at (and for) different things to me on this ladder, and don’t forget I have hindsight when he didn’t. I am sure in his own hindsight (what a wonderful thing that is) he would have held that extra tick anyway. But remember, exiting is NEVER a mistake, even when it is. If that makes sense, you are really tuned in now! Exiting takes more balls than entering, remember that when your ego is taking a bashing :). Don’t “be brave and get in”, “be brave and get out”!!!! Also notice what a big chunk of lay money bangs in at 1.76 just as he exits. This is further confirmation that serious money is resisting this price moving lower than 1.76.
03.04 – The price does similar to what it did at the bottom earlier. It hits 1.81 briefly and then money gets thrown in there to contain the price in the range below. The 2k or so backers money at 1.81 is then attacked by layers and it looks like it’s going to go up through 1.81, but yet more money comes in very strongly to put paid to that idea. That was two clear challenges to breaking out of the top of the range, both failed.
03.50 – Again we arrive at 1.76 and you can clearly see the market saying “no chance” and turning it back upwards. There is even a solid effort from a spoofer at 1.77 which is laughed at by the genuine layers. If you are not aware, “spoof money” is money put there purely to influence other traders. It’s been thrown in there to scare people and/or make the average novice traders panic into thinking this horse is going to come down in price. This will often cause the desired result as plonkers pile in under the 5k with their back bets “following the money”. The only trouble with that is that they often “follow sweet fanny adams” as “the money” wasn’t really there, it was just put there briefly to cause them to click then it disappears. Obviously this spoofer (maybe you’re reading, if so, stop it! :–)) wanted to push the price of this horse down for one of many possible reasons, we don’t care about those reasons. The money looked spoofish simply due to the sum being so much bigger than most bets entering the ladder, and it was confirmed as the spoofer pulled it out and ran for the hills when it came close to getting matched!
Spotting the spoof… 03.53 – Look carefully. The ladder shows over 5k ‘wanting’ to back at 1.77. The traded volume bar on the right shows 23.4k traded. Then the 5k disappears in the blink of an eye, but the traded volume doesn’t go up accordingly, so it didn’t get matched and is now safely back in his Betfair balance. In other words he bottled it and cancelled his order as it was never intended to actually get matched. Hence “spoof”. If that 5k bet was matched by a layer, that would have added 10k to the traded volume bar at that price. Another way to spot a weak attempt at spoofing is to see where it sits on the ladder. If you see regular very large sums (in relation to the rest of the bets) landing one tick away from the current prices then you are probably seeing spoof bets trying to push the market (actually the other traders) around. A tick away from the action gives the spoofer a bit more time to cancel it. I would love to watch someone spend a day quickly matching all spoof bets, that would be fun!
04.24 – Peter gets so tired of waiting for a breakout and therefore a trend to form (which is his plan for this market) that he eventually decides to make a few ticks if he can while he waits. He orders a back bet at 1.8 to see if he can take a few ticks in the range. He then cancels it at 05.27 and instead lays as he again feels like the price could push through him and out of the range, i.e. that the breakout he is waiting for turns up. Yet again it doesn’t happen and the backers turn up instead to resist the breakout. Watch the back money build up in seconds to over 2.5k at 1.8.
06.35 – Ok Peter, finally you got your wish!! Breakout time! Notice how hard it resisted the next attempt, but the layers finally overcame the backers and 1.82 is hit and surpassed. How many warnings did you see there? It did briefly break through, then the range boundary still dragged it back down briefly before losing for good the final time. All of this action was the period when (IF you were trading this) you were getting signals that this range wasn’t going to hold true for much longer, but even if you didn’t spot the signals, who cares because you had ample time and chances to get out with a break even or a tick or two loss at the most. Once 1.82 and 1.83 are showing clear volume growth, you know this range is no longer relevant. Watch it several times and you will actually start to feel the market forces pushing and pulling. No this isn’t mystical BS, it’s just learning to interpret what your eyes are seeing, and due to the speed at which you need to make these decisions, it becomes more of a feeling when actually trading. After the fact, watching back on a video for example, it’s easier to explain each specific thing but you can’t do that when it’s live in front of you, so this starts to become very intuitive. It has to really. You don’t have anything like enough time to discuss all the pros and cons with yourself before clicking.
The rest of the video is not of much use, other than to show that this breakout was strongly resisted even after it broke, there was strong backers money just slowing down the drift until it finally lets rip and gets up over 1.9.
So again, NOT an example of a race I would be range trading, and NOT an example of a good tight range. But nevertheless it’s very useful to show that even in markets I wouldn’t touch, ranges still have real power once they have clearly formed.
It is a very useful first step to learn, to be able to open up a market and determine if it’s a trending market or a ranging one (or neither/can’t tell). In this example, I would definitely not have believed it was a ranging one from early analysis. I want to see much clearer traded volume bands than this race showed. But as I watched, it became clear that there was an obvious range going on there, and it was evidently tradeable even if I wouldn’t have done so. I can not and would not criticise Peter Webb when it comes to trading. But if this was a video from my brother in law asking me for comments, just to be totally transparent here, I would probably have told him he was too fixated on “finding” the breakout he was so sure was coming, that he overlooked what the market was actually doing in front of his eyes. Peter Webb knows far too much to accuse him of that, and he was clearly spot on in waiting and planning for the move he wanted to trade there. But for someone inexperienced who definitely wouldn’t have known that was coming, this would have been a mistake to ignore so many obvious green ticks while waiting for ‘the big move’.
Watching 50+ markets a day 7 days a week is the only way to fully understand this if it’s all brand new to you. Trying to watch, learn, AND have money at risk all at the same time is a surefire way to failure. You will be shaken out of trading in no time. If you want to learn racing trading you start by watching, trading comes later when you feel SO sure you have sussed what’s going on that you just can’t not be involved in the next move you see coming. That’s how you know you’re ready to actually risk hard-earned money in these markets.
You will quickly learn what a ranging market is versus a trending one. Trending ones move even faster and are even more volatile, so they take even longer to learn to trade in my opinion. Also, the risks are greater in trending markets as a trend can reverse as fast (or faster) than it went, and if you haven’t mastered the art of spotting why and when it’s likely to happen, you will get a nice juicy green which turns into an equally juicy red in what feels like the blink of an eye. Trend reversals are actually another method I use which I haven’t explained here as I feel it would only confuse the issue. After a year of trading trends and ranges, you might be somewhere near ready to start trading reversals! Another year and you might be able to trade a trend, and then the subsequent reversal tacked onto the end!! But that’s for another time!
The nicest part of range trading is the stop loss issue. When trading a trend, you have to constantly move your stop loss to protect some green. Well, you don’t “have to”, but you should. Why make green if you are not securing some along the way? Range trading is different. In the example of a favourite trading between 1.94 and 2.0, if you lay it at 1.94 or 1.95 (both are acceptable to me) then you have a planned green exit (1.99 or 2.0), and a planned red exit (very important for reducing stress) which would be 1.93 or 1.92. This simplifies things a lot and it can really make the whole experience feel much more controlled and “easy”, if I dare to use that awful word, NO part of racing trading is “easy”, especially pre-race trading!
One other nice thing about range trading is the dilemma of when to make your entry. This dilemma is a constant one with trend trading but when you’re trading within a range, you don’t much care for where the price is between the range limits. You can just drop in two orders, a lay order down the bottom and a back order up the top. Now you sit back, absorb the commentary and watch what all the ladders are doing, you’re fairly relaxed. You just wait for an order to get taken as the price nudges up or down it’s range. When one of the orders is taken, you now switch on a bit and basically defend yourself against the risks. Is the live feed showing your horse messing the jockey around, rearing up on its way to the stalls, sweating and snorting like it’s about to keel over, getting a bad rap from the talking heads etc? If so, you now know the range may be under threat. Are the other horses staying in their range? Are any other horses playing up? Remember the see-saw analogy….. if a horse kicks his jockey off and then goes for a jolly jaunt the wrong way round the track closely followed by his trainer, jockey, and course staff, that horse’s ladder is almost certainly going to break out of its range, and that will affect our trade on the favourite.
Assuming all looks good, you just wait until your horse moves to the other end of his range, and you bank your green with a satisfying click, and often get back in for the return journey to the other end of the range. Obviously this sounds as easy as cake, and often it can be just that easy. But it isn’t always, and the breakouts can happen very suddenly and quickly, so if you miss your stop loss exit you will start getting quite panicked and quite red in more than one way. You need to be alert. Calm, but alert. The closer it is to the off, the more likely it is that the above threats can harm your trade. So a good tip might be to just start by watching only the 10-5 minutes pre-off period, less is likely to happen unexpectedly, but it always can.
There are various other approaches I use, including an occasional scalp which I use increasingly rarely these days but if bored I might steal a tick or two if it looks just too easy to ignore! There are obviously about sixty-five million other words I could write which would all be relevant and useful here. But firstly this is just a page on the site and is already a lot longer than I intended, secondly I am writing an ebook about this very subject so I will put my energy into explaining more there. (Edit: Done!)
For now I hope this has at least given the many people who have asked for it, a brief insight into what I do during the racing hours and some of the “whys” as well.
I will end with a reminder that my website is NOT intended to be any kind of trading advice or recommendation to do anything whatsoever. I merely share this stuff for educational purposes for people who want to read it.
Anything you do with your mouse is your responsibility, and yours alone!
Be a love and remember that won’t you 🙂
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